FCB’s double PAT sweetener

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First Capital Bank

LISTED financial institution First Capital Bank (FCB) projects to more than double after tax operating profit and grow total income by more than 58% in the fourth quarter of 2020 spurred by an increase in deposits.

BY TAURAYI MANGUDLA

This comes after the bank’s total income in inflation adjusted terms excluding property revaluation increased by 58% to $1,9 billion in the third quarter of its financial year to September 30.

Going forward, company secretary Violet Mutandwa said FCB projected it would most likely surpass its third quarter performance given the growth in deposits.

During the reporting period, the bank said in historical cost terms total income excluding property revaluation increased by 151% from $478 million to $1,2 billion while inflation adjusted after-tax operating profit increased by 100% to $376 million.

In historical cost terms, operating profit after tax increased by 450% to $314 million excluding property revaluation impact.

“This increase was largely driven by a $657 million increase in local currency loans, together with an increase in transactional volumes and inflation adjusted price increases,” Mutandwa said in a trading update for the period under review.

The bank registered a strong performance buoyed by exchange rate stability which resulted in inflation slowing down.

The third quarter, Mutandwa said, was characterised by exchange rate and price stability resulting in inflation starting to show a downward trend, with year-on-year inflation closing the quarter at 659% from a peak of 837% in July while month-on-month inflation closed the quarter at 3,8%.

She said the bank’s operating costs increased by 69% in inflation adjusted terms to $1,3 billion while in historical cost terms operating costs increased by 111% to $670 million.

The balance sheet growth was driven by local currency deposits which grew by 73% to $2,6 billion.

As a result of the growth in deposits, loans increased by 83% from $779 million to $1,4 billion.

Foreign currency deposits slightly increased by 3% from US$61 million to US$63 million while foreign currency loans reduced significantly due to repayments.

The bank said total capital adequacy ratio was 28% while liquidity ratio was 70%.